In March 1999, a lawsuit was filed on Parks' behalf against American hip-hop duo OutKast and LaFace Records, claiming that the group had illegally used Rosa Parks' name without her permission for the song "Rosa Parks", the most successful radio single of OutKast's 1998 album Aquemini. The song's chorus, which Parks' legal defense felt was disrespectful to Parks, is as follows: "Ah ha, hush that fuss / Everybody move to the back of the bus / Do you want to bump and slump with us / We the type of people make the club get crunk."

The case was dismissed in November 1999 by U.S. District Court Judge Barbara Hackett. In August 2000, Parks hired attorney Johnnie Cochran to help her appeal the district court's decision. Cochran argued that the song did not have First Amendment protection because, although its title carried Parks' name, its lyrics were not about her. However, U.S. District Judge Barbara Hackett upheld OutKast's right to use Parks' name in November 1999, and Parks took the case to the 6th U.S. Circuit Court of Appeals, where some charges were remanded for further trial.

Parks' attorneys and caretaker, Elaine Steele, refiled in August 2004, and named BMG, Arista Records and LaFace Records as the defendants, asking for $5 billion in damages. (Also named as defendants were several parties not directly connected to the songs, including Barnes & Noble and Borders Group for selling the songs, and Gregory Dark and Braddon Mendelson, the director and producer, respectively, of the 1998 music video. The judge dismissed the music video producers from the case by reason of "fraudulent joinder," as these dedendants had no connection to the case and there was no justifiable reason for for the plaintiff's attorneys to add them to the lawsuit.)

In October 2004, U.S. District Judge George Caram Steeh appointed Dennis Archer, a former mayor of Detroit and Michigan Supreme Court justice, as guardian of legal matters for Parks after her family expressed concerns that her caretakers and her lawyer was pursuing the case based on their own financial interest. "My auntie would never, ever go to this length to hurt some young artists trying to make it in the world," Parks' niece Rhea McCauley said in an Associated Press interview. "As a family, our fear is that during her last days Auntie Rosa will be surrounded by strangers trying to make money off of her name."

The lawsuit was settled April 15, 2005. In the settlement agreement, OutKast and their producer and recorded labels paid Parks an undisclosed cash settlement and agreed to work with the Rosa and Raymond Parks Institute for Self Development in creating educational programs about the life of Rosa Parks. The record labels and OutKast admitted to no wrongdoing. It is not known whether Parks' legal fees were paid for from her settlement money or by the record companies.

Rosa Parks resided in Detroit until she died at the age of ninety-two on October 24, 2005, about 19:00 EDT, in her apartment on the east side of the city. She had been diagnosed the previous year with progressive dementia.

City officials in Montgomery and Detroit announced on October 27, 2005 that the front seats of their city buses would be reserved with black ribbons in honor of Parks until her funeral. Parks' coffin was flown to Montgomery and taken in a horse-drawn hearse to the St. Paul African Methodist Episcopal (AME) church, where she lay in repose at the altar, dressed in the uniform of a church deaconess, on October 29, 2005. A memorial service was held there the following morning, and one of the speakers, Secretary of State Condoleezza Rice, said that if it had not been for Rosa Parks, she would probably have never become the Secretary of State. In the evening the casket was transported to Washington, D.C., and taken, aboard a bus similar to the one in which she made her protest, to lie in honor in the U.S. Capitol Rotunda (making her the first woman and second African American ever to receive this honor). An estimated 50,000 people viewed the casket there, and the event was broadcast on television on October 31, 2005. This was followed by another memorial service at a different St. Paul AME church in Washington on the afternoon of October 31, 2005. For two days, she lay in repose at the Charles H. Wright Museum of African American History in Detroit.

Parks' funeral service, seven hours long, was held on Wednesday, November 2, 2005, at the Greater Grace Temple Church. After the funeral service, an honor guard from the Michigan National Guard laid the U.S. flag over the casket and carried it to a horse-drawn hearse, which had been intended to carry it, in daylight, to the cemetery. As the hearse passed the thousands of people who had turned out to view the procession, many clapped and released white balloons. Rosa was interred between her husband and mother at Detroit's Woodlawn Cemetery in the chapel's mausoleum. (The chapel was renamed the Rosa L. Parks Freedom Chapel just after her death.) Parks had previously prepared and placed a headstone on the selected location with the inscription "Rosa L. Parks, wife, 1913–".

Parks received most of her national accolades very late in life, with relatively few awards and honors being given to her until many decades after the Montgomery Bus Boycott. In 1979, the National Association for the Advancement of Colored People awarded Parks the Spingarn Medal, its highest honor, and she received the Martin Luther King Jr. Award the next year. She was inducted into the Michigan Women's Hall of Fame in 1983 for her achievements in civil rights. In 1990, she was called at the last moment to be part of the group welcoming Nelson Mandela, who had just been released from his imprisonment in South Africa. Upon spotting her in the reception line, Mandela called out her name and, hugging her, said, "You sustained me while I was in prison all those years."

Parks received the Rosa Parks Peace Prize in 1994 in Stockholm, Sweden. On September 9, 1996, President Bill Clinton presented Parks with the Presidential Medal of Freedom, the highest honor given by the U.S. executive branch. In 1998, she became the first recipient of the International Freedom Conductor Award given by the National Underground Railroad Freedom Center. The next year, Parks was awarded the Congressional Gold Medal, the highest award given by the U.S. legislative branch and also received the Detroit-Windsor International Freedom Festival Freedom Award. Parks was a guest of President Bill Clinton during his 1999 State of the Union Address. Also that year, Time magazine named Parks one of the 20 most influential and iconic figures of the twentieth century. In 2000, her home state awarded her the Alabama Academy of Honor, as well as the first Governor's Medal of Honor for Extraordinary Courage. She was also awarded two dozen honorary doctorates from universities worldwide, and was made an honorary member of Alpha Kappa Alpha Sorority, Incorporated.

The Rosa Parks Library and Museum on the campus of Troy University in Montgomery, was dedicated to her on December 1, 2000. It is located on the corner where Parks boarded the famed bus. The most popular items in the museum are the interactive bus arrest of Mrs. Parks and a sculpture of Parks sitting on a bus bench. The documentary Mighty Times: The Legacy of Rosa Parks received a 2002 nomination for Academy Award for Documentary Short Subject. She also collaborated that year in a TV movie of her life starring Angela Bassett.

On October 28, 2005, the House of Representatives approved a resolution passed the previous day by the United States Senate to honor Parks by allowing her body to lie in honor in the U.S. Capitol Rotunda. . Since the founding of the practice of lying in state in the Rotunda in 1852, Parks was the 31st person, the first woman, the first American who had not been a U.S. government official, and the second non-government official (after Frenchman Pierre L'Enfant). She was also the second black person to lie in honor, after Jacob Chestnut, one of the two United States Capitol Police officers who were killed in the 1998 Capitol shooting. The 30th and 32nd persons so honored were former presidents Ronald Reagan and Gerald Ford, respectively.

On October 30, 2005, President George W. Bush issued a proclamation ordering that all flags on U.S. public areas both within the country and abroad be flown at half-staff on the day of Parks' funeral.

Metro Transit in King County, Washington placed stickers dedicating the first forward-facing seat of all its buses in Parks' memory shortly after her death, and the American Public Transportation Association declared December 1, 2005, the 50th anniversary of her arrest, to be a "National Transit Tribute to Rosa Parks Day". On that anniversary, President George W. Bush signed H. R. 4145, directing that a statue of Parks be placed in the United States Capitol's National Statuary Hall. In signing the resolution directing the Joint Commission on the Library to do so, the President stated:

“ By placing her statue in the heart of the nation's Capitol, we commemorate her work for a more perfect union, and we commit ourselves to continue to struggle for justice for every American. ”

On February 5, 2006, at Super Bowl XL, played at Detroit's Ford Field, Coretta Scott King and Parks, who had been a long-time resident of "The Motor City", were remembered and honored by a moment of silence. It was noted that the honor was to show respect for two women who had "helped make the nation as a whole great." The Super Bowl was dedicated to their memory.

In the Los Angeles County MetroRail system, the Imperial Highway/Wilmington station, where the Blue Line connects with the Green Line, has been officially named the "Rosa Parks Station".

Rosa Parks sits in the front of a bus in Montgomery, Alabama, in 1956 after the U.S. Supreme Court ruled segregation illegal on the city's bus system. Behind Parks is Nicholas C. Chriss, a UPI reporter covering the event.